Insurance cover up, but medical expenses push more into poverty

Households with catastrophic health expenditures have risen significantly across both rural and urban India between 2004 and 2014, a time when insurance coverage rose from about 1% to 15% of the population.Rema Nagarajan | TNN | December 03, 2016, 09:11 IST

Increased insurance coverage in India has not led to any reduction in the numbers of those being impoverished by healthcare expenditure or ‘catastrophic health spending’, the two main objectives of health insurance, a study has found.

In fact, households with catastrophic health expenditures have risen significantly across both rural and urban India between 2004 and 2014, a time when insurance coverage rose from about 1% to 15% of the population. This was revealed by Brookings India, a policy think tank, which brought out a report based on a study of health expenditure data from the National Sample Surveys of 2004 and 2014.

Catastrophic health expenditure is defined as households spending over a certain proportion of their income on this head. The study considered three thresholds — 15%, 25% and 40% — and the conclusion was the same in each case. “Expansion of health insurance was a policy priority during this period and most of the increase in coverage happened because of public insurance. Yet catastrophic expenditures have risen significantly, especially for urban households. And the overall percentage of Indian households that fell below the poverty line due to out-of-pocket health expenses remained unchanged at 7% over the ten years. Is it because of the way insurance companies function or because people are unaware of what insurance coverage can provide them? We need to study why this is so,” said DrShamika Ravi of Brookings India, the lead author of the report.

Dr Srinath Reddy, president of the Public Health Foundation of India, pointed out that the percentage of households impoverished by health expenses remaining unchanged at 7% meant a huge increase in the number of such households (from about 77 million in 2004 to over 88 million in 2014, due to the rise in population). That’s like a population larger than Germany’s (just over 80 million) being pushed into poverty because of health expenses.

Dr Ravi said that increased insurance coverage appears to have increased access to hospitalised care. However, Dr Reddy pointed out that if the government was paying for the services through greater public health insurance coverage, there ought to be more accountability, without which a patient going to a private hospital could be subjected to “induced care” and treated as an ATM.

He said hospitals tended to focus more on making money. The study showed that private out-of-pocket expenditures comprised 67% of total health expenditure in India, which included private and government expenditure. This is one of the highest levels in the world.

“What is heartening is that the OOP burden has fallen marginally in the 10 years from 2004, when it was above 70%,” stated the study. It showed that most of the rise in out-of-pocket expenditure was due to the rise in in-patient spending and not out-patient spending.

The report also noted a “worrying” aspect, which was that in the rural areas, out-of-pocket spending by rich has remained constant, but that by the poorest 20% has risen by 77%. This despite the poor being the target of most health insurance schemes.